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Abstract

In the United States, one of the primary goals of agricultural policy has long been, and continues to be, saving the "family farm." Section 2032A of the Internal Revenue Code, which reduces the estate tax burden for agricultural land owners, is one example of this type of agricultural policy. However, restrictions that section 2032A places on cash leasing of farmland lead to outcomes inconsistent with that goal. This article describes these inconsistencies and proposes amendments to the statute that would align the effects of the statute with Congress's stated goal of saving the family farm. First, the article presents a brief background to the passing of section 2032A. Second, the article summarizes generally the application of the statute. Third, it introduces cash leases and describes how Congress, the Treasury Department, and federal courts have interpreted the statute to restrict cash leasing. Fourth, it analyzes the congressional purpose behind section 2032A, describes the real world effects of the restrictions on cash leasing, and demonstrates why these effects are contrary to the congressional purpose. Finally, the article proposes amendments to section 2032A that would align more closely the effects of the statute with the purpose behind it.